Online taxi service Uber has been banned in the Indian capital New Delhi after a woman alleged she was raped by one of its drivers.
The woman, who works for a finance company, claims she was raped on Friday night on her way home from a dinner engagement in the Indian capital.
Following the arrest, transportation official Satish Mathur said Uber taxi services will no longer be able to operate in New Dehli.
It has also emerged that the man accused of raping the 26-year-old alleged victim was arrested on suspicion of sexual assault three years ago.
Indian police said they were considering legal action against the online taxi service for 'failing to run background checks'.
The company said there were no defined rules in India on background checks for commercial transport licences and it was working with the government to address the issue.
The arrested driver, Shiv Kumar Yadav, is expected to appear in court today. He was arrested for raping a woman three years ago but was later acquitted, police said.
Police said the 32-year-old driver dropped the woman home after attacking her and warned her not to inform the authorities.
She managed to note the driver's number and take a photograph of his car, they said.
Police accuse Uber of failing to check whether the driver had a clean police record or had a satellite location device in his car.
The alleged sexual assault happened two years after the fatal gang rape of another young woman taking public transport in New Delhi.
That case led to nationwide protests and forced the government to address demands for heavier sentences for rape.
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In a reminder of the 2012 bus attack, the 26-year-old victim of Friday night's assault told police the driver threatened to insert a rod in her genitals, Indian media reported.
Indian police made the arrest in the suspect's hometown in Uttar Pradesh, where the vehicle he was driving was found abandoned.
Uber said it had suspended the driver following the allegations, in line with company policy, and would assist the police.
San Francisco-based Uber, founded in March 2009, now serves 45 countries around the world.
The CEO of the San Francisco-based company, Travis Kalanick, said it would do "everything to bring the perpetrator to justice and to support the victim and her family in her recovery".
The criticism of Uber comes at a time when the company has faced critical news coverage over its driver screening in the United States, and has apologised for comments by an executive who suggested "digging up dirt" on journalists investigating the firm.
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